companies buying cryptocurrencies

Cryptocurrency is gradually becoming an attraction for all types of institutes around the world. The entrance of corporations into the crypto market has played a major role in escalating the dominance of virtual currencies. There was a time when firms were reluctant to invest in cryptocurrencies due to their speculative nature and legal barriers. But now, the scenario has changed, and the increase in corporate investment in virtual currency is quite visible. 

The corporate world banking institutions have been investing in stocks and forex for last many years. Banks invest a huge amount of their deposits in forex and commodity trading in order to generate profit. Companies also have been investing in commodity forex trading to generate additional revenue in order to finance their business expansion.  

As the virtual currency market has developed over the last decade, many public and private companies have started investing in bitcoin and other digital currencies. The corporate world has acknowledged the potential gain in the crypto-market, and plan to invest in profitable cryptocurrencies like bitcoin, Ethereum, and Litecoins. Plus, platforms like bitql website have made it easier for businesses to invest in the cryptocurrency market. 

Impact of cryptocurrencies on financial statements 

Public limited companies are allocating their funds towards buying virtual currencies with the hope of getting a reasonable return. When companies invest their funds into some markets, it has to be shown on financial statements. Most of the accounting systems display the occurrence of loss. If the financial records show the loss in virtual market investment, then it would impact the overall image of the company and investors might not be entertained by such results. 

Secondly, in the United States virtual currency treatment, most of the accounting entry system accepted is bound to show the losses gained from virtual currency investment, which results due to speculative nature of the market.  

The problem is that the system does not permit to show the profits gained from the investment. This creates a problem when only one side of the situation is portrayed. In order to tackle the situation, firms need to come up with a more appropriate way of displaying financial records to investors, in which gains are also written 

Investment by globally recognized companies in the virtual currency market 

Investment by public limited companies in the digital currency market has shown an increase in the worth of currencies like bitcoin. It was reported that the sum of the three major giant companies invested in bitcoin is more than $ 3.8 billion.  

Microstrategy is the only company to invest more than $ 2 billion in buying bitcoin. Microstrategy is the first software company to invest in bitcoin on such a large scale. Tesla invested $1.5 billion to acquire bitcoins recently. It was a huge step forward by the corporate world in accepting the profitability element in the virtual currency market. 

 

The third company to take the position is Square. Square is a financial service provider company that invested more than $ 215 million in bitcoin. The only payment company to invest in the virtual currency market on such a large scale.